Police in the Netherlands have arrested a man who was allegedly part of the ZKasino platform that scammed people out of $33m. [Image: Shutterstock.com]

Getting brought to justice

Treacherous waters often await people who invest in projects doing the rounds on social media. The latest instance of this is a platform called ZKasino which promised investors a return on their money within 30 days. The website claimed that it could help users create a blockchain-based gambling platform in a matter of minutes with no coding skills and then gain immediate access to a pool of players due to the shared liquidity.

After garnering plenty of attention from interested parties, the people behind the platform disappeared with about $33m worth of cryptocurrency. Police in the Netherlands quickly tracked down a suspect who was allegedly part of the scheme.

seizing assets worth more than €11.4m ($12m), such as a luxury car, real estate, and cryptocurrency

In a press release on Friday, the Netherlands Fiscal Information and Investigation Service (FIOD) revealed that it arrested a 26-year-old male on April 29 on suspicion of money laundering, embezzlement, and fraud. The authorities searched the Dutch national’s residence, seizing assets worth more than €11.4m ($12m), such as a luxury car, real estate, and cryptocurrency. It said that further arrests could be in the cards.

Raising suspicions

The FIOD started looking into ZKasino on April 25 after receiving complaints from people who invested in the blockchain casino project. Investigators worked closely with cryptocurrency exchange Binance’s Financial Crime Compliance and Investigations team to freeze funds.

The FIOD intends to return the money to the victims if they cooperate with the investigation. A Telegram group named “ZKasino Legal Task Force” was set up by people impacted by the scam; the FIOD posted in the channel when the arrest was made.

This is not the first time that Binance has cooperated with law enforcement against fraudsters. It aided police in India in arresting people behind a $10m fraudulent gaming app earlier this month.

Investors began to question the legitimacy of ZKasino shortly after the network went live on April 20. More than 10,000 investors had invested 10,515 ETH ($33m) on the promise of earning rewards for their locked-up funds.

The platform’s owners swapped the ETH with its $ZKAS tokens, which they put into the Lido staking protocol. The website also no longer showed a statement saying investors would be guaranteed to receive their returns in ETH. Numerous cryptocurrency exchanges quickly moved to cancel their plans to list the $ZKAS token over these suspicious actions.

A dodgy track record

People then started doing some digging into ZKasino and uncovered some unsettling allegations. The platform had said in March on social media that it received a valuation of $350m following a Series A funding round and that venture capital (VC) firm Big Brain Holdings was one of the backers. The VC company posted on X to clarify the truth behind this claim:

In a post, ZigZag Exchange claimed that the founders of ZKasino stole money from its treasury and used some of the funds to build the now under-fire gambling platform. It said that three founders of ZKasino controlled the $15m that ZigZag previously raised.